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Will AT&T Acquire Vodafone?

AT&T is still looking at Europe's largest mobile carrier.

Although we don't believe in timing the market or panicking over daily movements, we do like to keep an eye on market changes -- just in case they're material to our investing thesis.

Following two days of losses, stocks are rebounding this morning, with the S&P 500 and the narrower, price-weighted Dow Jones Industrial Average(DJINDICES:^DJI) up 0.18% and 0.33%, respectively, at 10:20 a.m. EDT.

After yesterday's market close, Bloomberg reported that Dow component AT&T(NYSE:T) is making internal preparations for a potential acquisition of Europe's largest mobile carrier, Vodafone (NASDAQ:VOD)Judging from the Vodafone share price graph, the news hit the stock market ahead of the article's 4:36 p.m. EDT publication:

While the article is quick to point out that the two companies haven't begun formal discussions, this isn't the first time AT&T has had its eye on Vodafone. At the beginning of April, AT&T and Verizon were reportedly considering a joint bid for the company.

Verizon ultimately nixed a joint offer because of its complexity and went on to ink its own $130 billion deal for the asset it coveted, Vodafone's 45% stake in Verizon Wireless. In fact, any deal to acquire Vodafone would need to wait for that transaction to close, which is expected to happen early next year.

Vodafone CEO Vittorio Colao, a by-the-numbers former McKinsey consultant, is probably agnostic on the idea of a takeover, but the numbers need to make sense for his shareholders. He and his board did a first-rate job of getting Verizon to pay a full price for the Verizon Wireless stake.

AT&T CEO Randall Stephenson, on the other hand, has previously highlighted a "huge opportunity" in mobile broadband in Europe, adding that he would acquire wireless assets if they were available at the right price. The rationale for acquiring Vodafone is clear: growth. In the U.S. market, AT&T is the No. 2 mobile carrier, but it's losing market share to the No. 1 player, Verizon Wireless, and the No. 3, T-Mobile USA.

With any formal discussions yet to begin, we're some ways from an acquisition deal between AT&T and Vodafone. However, investors are responding positively to the idea this morning, with AT&T shares up 0.8%